FEDERATED INVESTORS, INC.
 
                              STOCK INCENTIVE PLAN
                        (Adopted as of February 20, 1998)
                         (Amended as of August 26,1998)
                         (Amended as of August 31, 1998)
                        (Amended as of January 26, 1999)
                          (Amended as of May 17, 1999)
                          (Amended as of July 20, 1999)
                        (Amended as of January 29, 2002)
                    (Approved by Shareholders April 24, 2002)
 
 
1.     Purpose
 
     The purpose of the Federated  Investors,  Inc.  Stock  Incentive  Plan (the
"Plan") is to:
 
(a)  Facilitate  the assumption by Federated  Investors,  Inc., as the surviving
     corporation of a merger with its parent corporation,  Federated  Investors,
     of certain stock incentive awards previously made by Federated Investors to
     its employees; and
 
(b)  Continue to promote  the  long-term  growth and  performance  of  Federated
     Investors,  Inc. and its affiliates  and to attract and retain  outstanding
     individuals  by awarding  directors,  executive  officers and key employees
     stock options,  stock appreciation rights,  performance awards,  restricted
     stock and/or other stock-based awards.
 
2.     Definitions
 
      The following definitions are applicable to the Plan:
 
     "Award" means the grant of Options,  SARs,  Performance Awards,  Restricted
Stock or other stock-based award under the Plan.
 
     "Board" means the Board of Directors of the Company.
 
     "Board  Committee" means the committee of the Board appointed in accordance
with Section 4 to administer the Plan.
 
     "Code" means the Internal Revenue Code of 1986, as amended.
 
     "Commission" means the Securities and Exchange Commission.
 
     "Common Stock" means the Class B Common Stock of the Company,  no par value
per share.
 
     "Company" means Federated Investors, Inc., a Pennsylvania corporation,  and
its successors and assigns.
 
     "Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
     "Fair Market Value" means, on any date, the closing sale price of one share
of Common  Stock,  as  reported on the New York Stock  Exchange or any  national
securities  exchange  on which the Common  Stock is then listed or on The NASDAQ
Stock  Market's  National  Market  ("NNM")  if the Common  Stock is then  quoted
thereon, as published in the Wall Street Journal or another newspaper of general
circulation,  as of such date or,  if there  were no sales  reported  as of such
date, as of the last date  preceding  such date as of which a sale was reported.
In the event  that the  Common  Stock is not  listed  for  trading on a national
securities  exchange or authorized for quotation on NNM, Fair Market Value shall
be the closing bid price as  reported by The NASDAQ  Stock  Market or The NASDAQ
SmallCap  Market  (if  applicable),  or if no such  prices  shall  have  been so
reported for such date, on the next preceding date for which such prices were so
reported. In the event that the Common Stock is not listed on the New York Stock
Exchange, a national securities exchange or NNM, and is not listed for quotation
on The NASDAQ  Stock  Market or The NASDAQ  SmallCap  Market,  Fair Market Value
shall be determined in good faith by the Board Committee in its sole discretion,
and for this  purpose  the  Board  Committee  shall be  entitled  to rely on the
opinion of a qualified  appraisal  firm with respect to such Fair Market  Value,
but the Board Committee shall in no event be obligated to obtain such an opinion
in order to determine Fair Market Value.
 
     "Grant Date" means the date on which the grant of an Option  under  Section
5.1 hereof or a SAR under Section 6.1 hereof becomes  effective  pursuant to the
terms of the Stock Option Agreement or Stock Appreciation  Rights Agreement,  as
the case may be, relating thereto.
 
      "Incentive  Stock Option"  means an option to purchase  shares of Common
Stock  designated  as an  incentive  stock  option  and  which  complies  with
Section 422 of the Code.
 
      "Non-Statutory  Stock  Option"  means an  option to  purchase  shares of
Common Stock which is not an Incentive Stock Option.
 
      "Offering"  means the initial public offering of Class B Common Stock by
United States and international underwriters.
 
      "Option"  means any option to purchase  shares of Common  Stock  granted
under Sections 5.1 or 10.1 hereof.
 
      "Option  Price" means the  purchase  price of each share of Common Stock
under an Option.
 
      "Outside  Director"  means a member of the Board who is not an  employee
of the Company or any Subsidiary.
 
      "Participant"  means  any  salaried  employee  of the  Company  and  its
affiliates  designated  by the Board  Committee  to receive an Award under the
Plan.
 
      "Performance  Award"  means an Award of shares of Common  Stock  granted
under Section 7.
 
      "Performance  Period" means the period of time  established by the Board
Committee for achievement of certain objectives under Section 7.1 hereof.
 
      "Restriction   Period"   means  the  period  of  time   specified  in  a
Performance  Share Award Agreement or a Restricted Stock Award  Agreement,  as
the case may be,  between the  Participant  and the Company  during  which the
following  conditions remain in effect:  (i) certain  restrictions on the sale
or other  disposition  of shares of Common Stock awarded  under the Plan,  and
(ii) subject  to the  terms of the  applicable  agreement,  a  requirement  of
continued  employment of the Participant in order to prevent forfeiture of the
Award.
 
      "Stock Appreciation  Rights" or "SARs" means the right to receive a cash
payment  from the Company  equal to the excess of the Fair  Market  Value of a
stated  number of shares of  Common  Stock at the  exercise  date over a fixed
price for such shares.
 
      "Subsidiary"  means  any  corporation,  business  trust  or  partnership
(other  than the  Company)  in an  unbroken  chain of  corporations,  business
trusts  or   partnerships   beginning   with  the   Company  if  each  of  the
corporations,   business   trusts  or   partnerships   (other  than  the  last
corporation,   business  trust  or  partnership  in  the  chain)  owns  stock,
beneficial  interests or partnership  interests  possessing 50% or more of the
total  combined  voting  power of all  classes  of  stock in one of the  other
corporations, business trusts or partnerships in the chain.
 
      "Ten  Percent  Holder"  means a person who owns  (within  the meaning of
Section 424(d)  of the Code) more than ten percent of the voting  power of all
classes of stock of the Company or of its parent corporation or Subsidiary.
 
3     .     Shares Subject to Plan
 
3.1         Shares Reserved under the Plan.  Subject to adjustment as provided
in Section 3.2,  the number of shares of Common Stock  cumulatively  available
under the Plan shall equal 13,500,000  shares.  All of such authorized  shares
of Common Stock shall be available  for the grant of Incentive  Stock  Options
under the Plan. No  Participant  shall receive  Awards in respect of more than
600,000  shares  of  Common  Stock  in any  fiscal  year  of the  Company.  In
addition,  the aggregate  Fair Market Value  (determined on the Grant Date) of
Common  Stock  with  respect  to  which  Incentive  Stock  Options  granted  a
Participant  become exercisable for the first time in any single calendar year
shall not exceed $100,000.  Any Common Stock issued by the Company through the
assumption or substitution of outstanding grants from an acquired  corporation
or entity  shall not reduce the shares  available  for grants  under the Plan.
Shares of Common  Stock to be issued  pursuant  to the Plan may be  authorized
and unissued shares,  treasury shares, or any combination thereof.  Subject to
Section 6.2  hereof,  if any  shares  of  Common  Stock  subject  to an  Award
hereunder are  forfeited or any such Award  otherwise  terminates  without the
issuance of such shares of Common Stock to a Participant,  or if any shares of
Common Stock are  surrendered by a Participant  in full or partial  payment of
the  Option  Price  of an  Option,  such  shares,  to the  extent  of any such
forfeiture,  termination  or  surrender,  shall again be  available  for grant
under the Plan.
 
3.2         Adjustments.  The aggregate number of shares of Common Stock which
may be awarded  under the Plan and the terms of  outstanding  Awards  shall be
adjusted by the Board Committee to reflect a change in the  capitalization  of
the  Company,  including  but not  limited  to,  a stock  dividend  or  split,
recapitalization,    reorganization,   merger,   consolidation,   combination,
exchange  of shares,  spin-off,  spin-out or other  distribution  of assets to
shareholders;  provided  that the  number  and  price  of  shares  subject  to
outstanding  Options  granted  to Outside  Directors  pursuant  to  Section 10
hereof  and the  number of shares  subject  to future  Options  to be  granted
pursuant to  Section 10  shall be subject to  adjustment  only as set forth in
Section 10 hereof.
 
3.3         Merger With Federated  Investors.  Notwithstanding  the foregoing,
the  Company's   merger  with  Federated   Investors  and  assumption  of  its
outstanding  stock  incentive  awards will not result in any adjustment to the
number  of  shares  available  under the Plan and will  reduce  the  number of
shares  available  under this Plan  accordingly.  For  purposes  of this Plan,
after the merger all such stock  incentive  awards  shall be treated as Awards
under this Plan, except that any Grant Date,  Performance Period or Restricted
Period  shall  relate  back to the  date on  which  the  awards  were  made by
Federated Investors.
 
4     .     Administration of Plan
 
4.1         Administration   by  the  Board  Committee.   The  Plan  shall  be
administered as follows.
 
(a)   Prior to an Offering, the Plan shall be administered by either the full
            Board or by the Board Committee if one is established by the
            Board. Prior to an Offering, any member of the Board may serve on
            the Board Committee.
 
(b)   After an Offering, the Plan shall be administered by the Board
            Committee, which shall consist of no fewer than two members of
            the Board who are (i) "Non-Employee Directors" for purposes of
            Rule 16b-3 of the Commission under the Exchange Act and (ii) to
            the extent required to ensure that awards under the Plan are
            exempt for purposes of Section 162(m) of the Code, "outside
            directors" for purposes of Section 162(m); provided, however,
            that the Board Committee may delegate some or all of its
            authority and responsibility under the Plan with respect to
            Awards to Participants who are not subject to Section 16 of the
            Exchange Act to the Chief Executive Officer of the Company. In
            the event that, after an Offering, the Board does not have two
            members who qualify as "Non-Employee Directors" for purposes of
            Rule 16b-3, the Plan shall be administered by the full Board.
 
(c)   The Board Committee shall have authority to interpret the Plan, to
            establish, amend, and rescind any rules and regulations relating
            to the Plan, to prescribe the form of any agreement or instrument
            executed in connection herewith, and to make all other
            determinations necessary or advisable for the administration of
            the Plan. All such interpretations, rules, regulations and
            determinations shall be conclusive and binding on all persons and
            for all purposes. In addition, the Board Committee shall have
            authority, without amending the Plan, to grant Awards hereunder
            to Participants who are foreign nationals or employed outside the
            United States or both, on terms and conditions different from
            those specified herein as may, in the sole judgment and
            discretion of the Board Committee, be necessary or desirable to
            further the purpose of the Plan.
 
(d)   Notwithstanding the foregoing, the Board Committee shall not have any
            discretion with respect to Options granted to Outside Directors
            pursuant to Section 10 hereof. In the event that the Board does
            not establish a Board Committee for any reason, any reference in
            this Plan to the Board Committee shall be deemed to refer to the
            full Board.
 
4.2         Designation of Participants.  Participants shall be selected, from
time to time, by the Board  Committee,  from those executive  officers and key
employees of the Company and its  affiliates  who, in the opinion of the Board
Committee,  have the capacity to contribute materially to the continued growth
and  successful  performance  of  the  Company.  Outside  Directors  shall  be
Participants only in accordance with Section 10.
 
5     .     Stock Options
 
5.1         Grants.  Options  may be  granted,  from  time  to  time,  to such
Participants  as may be selected  by the Board  Committee  on such terms,  not
inconsistent  with this Plan,  as the Board  Committee  shall  determine.  The
Option  Price shall be  determined  by the Board  Committee  effective  on the
Grant  Date;  provided,  however,  that  (i) in  the case of  Incentive  Stock
Options  granted to a  Participant  who on the Grant Date is not a Ten Percent
Holder,  such price shall not be less than one hundred  percent  (100%) of the
Fair Market  Value of a share of Common  Stock on the Grant Date,  (ii) in the
case of an Incentive  Stock Option  granted to a Participant  who on the Grant
Date is a Ten  Percent  Holder,  such price shall be not less than one hundred
and ten percent  (110%) of the Fair Market Value of a share of Common Stock on
the Grant Date, and (iii) in the case of  Non-Statutory  Stock  Options,  such
price  shall be not less than  eighty-five  percent  (85%) of the Fair  Market
Value of a share of Common  Stock on the Grant  Date.  The number of shares of
Common Stock subject to each Option granted to each Participant,  the terms of
each  Option,  and  any  other  terms  and  conditions  of an  Option  granted
hereunder shall be determined by the Board Committee,  in its sole discretion,
effective  on the Grant  Date;  provided,  however,  that no  Incentive  Stock
Option  shall be  exercisable  any later  than ten (10)  years  from the Grant
Date. Each Option shall be evidenced by a Stock Option  Agreement  between the
Participant  and the Company which shall  specify the type of Option  granted,
the  Option  Price,  the term of the  Option,  the  number of shares of Common
Stock to which the  Option  pertains,  the  conditions  upon  which the Option
becomes  exercisable  and  such  other  terms  and  conditions  as  the  Board
Committee shall determine.
 
5.2         Payment  of Option  Price.  No shares  of  Common  Stock  shall be
issued  upon  exercise  of an Option  until full  payment of the Option  Price
therefor by the  Participant.  Upon exercise,  the Option Price may be paid in
cash,  and,  subject to approval by the Board  Committee,  in shares of Common
Stock  having  a Fair  Market  Value  equal  to the  Option  Price,  or in any
combination thereof, or in any other manner approved by the Board Committee.
 
5.3         Rights  as  Shareholders.  Participants  shall not have any of the
rights of a shareholder  with respect to any shares subject to an Option until
such shares have been issued upon the proper exercise of such Option.
 
5.4         Transferability  of Options.  Options  granted  under the Plan may
not  be  sold,  transferred,  pledged,  assigned,  hypothecated  or  otherwise
disposed  of  except  by will  or by the  laws of  descent  and  distribution;
provided,  however,  that, if authorized in the applicable Award agreement,  a
Participant  may  make one or more  gifts  of  Options  granted  hereunder  to
members of the  Participant's  immediate  family or trusts or partnerships for
the  benefit of such family  members.  All  Options  granted to a  Participant
under the Plan shall be  exercisable  during the lifetime of such  Participant
only by such Participant,  his agent, guardian or attorney-in-fact;  provided,
however,  that all Options  transferred in a manner  consistent with the terms
of an Award agreement may be exercised by the transferee.
 
5.5         Termination  of  Employment.  If a  Participant  ceases  to  be an
employee  of either  the  Company  or of any of its  affiliates,  the  Options
granted  hereunder  shall be exercisable  in accordance  with the Stock Option
Agreement between the Participant and the Company.
 
5.6         Designation of Incentive Stock Options. Except as otherwise
expressly provided in the Plan, the Board Committee may, at the time of the
grant of an Option, designate such Option as an Incentive Stock Option under
Section 422 of the Code.
 
5.7         Certain Incentive Stock Option Terms. In the case of any grant of
an Incentive Stock Option, whenever possible, each provision in the Plan and
in any related agreement shall be interpreted in such a manner as to entitle
the Option holder to the tax treatment afforded by Section 422 of the Code,
and if any provision of this Plan or such agreement shall be held not to
comply with requirements necessary to entitle such Option to such tax
treatment, then (i) such provision shall be deemed to have contained from the
outset such language as shall be necessary to entitle the Option to the tax
treatment afforded under Section 422 of the Code, and (ii) all other
provisions of this Plan and the agreement relating to such Option shall
remain in full force and effect. If any agreement covering an Option
designated by the Board Committee to be an Incentive Stock Option under this
Plan shall not explicitly include any terms required to entitle such
Incentive Stock Option to the tax treatment afforded by Section 422 of the
Code, all such terms shall be deemed implicit in the designation of such
Option and the Option shall be deemed to have been granted subject to all
such terms.
 
6     .     Stock Appreciation Rights
 
6.1         Grants.  Stock  Appreciation  Rights may be granted,  from time to
time, to such salaried  employees of the Company and its  affiliates as may be
selected by the Board Committee.  SARs may be granted at the discretion of the
Board Committee  either (i) in  connection with an Option or  (ii) independent
of an Option.  The price from which  appreciation  shall be computed  shall be
established by the Board Committee at the Grant Date; provided,  however, that
such  price  shall not be less  than  one-hundred  percent  (100%) of the Fair
Market Value of the number of shares of Common  Stock  subject of the grant on
the Grant Date. In the event the SAR is granted in connection  with an Option,
the fixed price from which  appreciation shall be computed shall be the Option
Price. Each grant of a SAR shall be evidenced by a Stock  Appreciation  Rights
Agreement  between the  Participant  and the Company  which shall  specify the
type of SAR granted,  the number of SARs, the  conditions  upon which the SARs
vest  and such  other  terms  and  conditions  as the  Board  Committee  shall
determine.
 
6.2         Exercise  of SARs.  SARs may be  exercised  upon  such  terms  and
conditions as the Board Committee shall  determine;  provided,  however,  that
SARs granted in  connection  with Options may be exercised  only to the extent
the related Options are then exercisable.  Notwithstanding Section 3.1 hereof,
upon exercise of a SAR granted in connection  with an Option as to all or some
of  the  shares   subject  of  such  Award,   the  related   Option  shall  be
automatically  canceled  to the extent of the number of shares  subject of the
exercise,  and such shares shall no longer be available  for grant  hereunder.
Conversely,  if the  related  Option  is  exercised  as to  some or all of the
shares subject of such Award, the related SAR shall  automatically be canceled
to the extent of the number of shares of the  exercise,  and such shares shall
no longer be available for grant hereunder.
 
6.3         Payment of Exercise.  Upon  exercise of a SAR, the holder shall be
paid in cash the  excess  of the Fair  Market  Value of the  number  of shares
subject  of the  exercise  over the  fixed  price,  which in the case of a SAR
granted  in  connection  with an Option  shall be the  Option  Price for such,
shares.
 
6.4         Rights  of  Shareholders.  Participants  shall not have any of the
rights of a  shareholder  with  respect to any Options  granted in  connection
with a SAR until  shares  have been  issued  upon the  proper  exercise  of an
Option.
 
6.5         Transferability  of SARs.  SARs granted  under the Plan may not be
sold, transferred,  pledged,  assigned,  hypothecated or otherwise disposed of
except by will or by the laws of descent and  distribution.  All SARs  granted
to a Participant  under the Plan shall be  exercisable  during the lifetime of
such  Participant  only  by  such  Participant,   his  agent,   guardian,   or
attorney-in-fact.
 
6.6         Termination  of  Employment.  If a  Participant  ceases  to  be an
employee  of either the  Company  or of any of its  affiliates,  SARs  granted
hereunder  shall be  exercisable  in  accordance  with the Stock  Appreciation
Rights Agreement between the Participant and the Company.
 
7     .     Performance Awards
 
7.1         Awards.  Awards of shares of Common  Stock may be made,  from time
to time, to such Participants as may be selected by the Board Committee.  Such
shares shall be  delivered to the  Participant  only upon  (i) achievement  of
such  corporate,  sector,  division,  individual  or any other  objectives  or
criteria  during the  Performance  Period as shall be established by the Board
Committee  and  (ii) the  expiration  of the  Restriction  Period.  Except  as
provided in the Performance  Share Award Agreement between the Participant and
the Company,  shares  subject to such Awards under this  Section 7.1  shall be
released  to the  Participant  only  after  the  expiration  of  the  relevant
Restriction  Period. Each Award under this Section 7.1 shall be evidenced by a
Performance  Share Award  Agreement  between the  Participant  and the Company
which shall specify the applicable  performance  objectives,  the  Performance
Period,  the  Restriction  Period,  any  forfeiture  conditions and such other
terms and conditions as the Board Committee shall determine.
 
7.2         Stock Certificates.  Upon an Award of shares of Common Stock under
Section 7.1 of the Plan,  the Company shall issue a certificate  registered in
the name of the Participant  bearing the following legend and any other legend
required by any federal or state  securities laws or by the Delaware  Business
Trust Act:
 
            "The  sale or other  transfer  of the  shares of stock
            represented by this  certificate is subject to certain
            restrictions  set  forth in the  Federated  Investors,
            Inc.  Stock  Incentive  Plan,   administrative   rules
            adopted pursuant to such Plan and a Performance  Share
            Award  Agreement  between  the  registered  owner  and
            Federated  Investors,  Inc.  A copy of the Plan,  such
            rules  and such  Agreement  may be  obtained  from the
            Secretary of Federated Investors, Inc."
 
Unless  otherwise  provided in the Performance  Share Award Agreement  between
the Participant and the Company,  such  certificates  shall be retained by the
Company until the expiration of the  Restriction  Period.  Upon the expiration
of the  Restriction  Period,  the Company  shall  (i) cause the removal of the
legend  from the  certificates  for such shares as to which a  Participant  is
entitled in accordance with the Performance  Share Award Agreement between the
Participant  and the  Company and  (ii) release  such shares to the custody of
the Participant.
 
7.3         Rights  as   Shareholders.   Subject  to  the  provisions  of  the
Performance  Share Award  Agreement  between the  Participant and the Company,
during the Performance  Period,  dividends and other  distributions  paid with
respect to all shares awarded thereto under  Section 7.1  hereof shall, in the
discretion of the Board  Committee,  either be paid to Participants or held in
escrow by the Company and paid to  Participants  only at such time and to such
extent as the related  Performance Award is earned.  During the period between
the  completion  of  the   Performance   Period  and  the  expiration  of  the
Restriction  Period,  Participants  shall be entitled to receive dividends and
other  distributions  only as to the number of shares determined in accordance
with the  Performance  Share Award  Agreement  between the Participant and the
Company.
 
7.4         Transferability of Shares.  Certificates  evidencing the shares of
Common Stock  awarded under the Plan shall not be sold,  exchanged,  assigned,
transferred,   pledged,  hypothecated  or  otherwise  disposed  of  until  the
expiration of the Restriction Period.
 
7.5         Termination  of  Employment.  If a  Participant  ceases  to  be an
employee  of either  the  Company or of one of its  affiliates,  the number of
shares  subject  of the  Award,  if any,  to which  the  Participant  shall be
entitled shall be determined in accordance  with the  Performance  Share Award
Agreement between the Participant and the Company.
 
7.6         Transfer of  Employment.  If a  Participant  transfers  employment
from one  business  unit of the  Company or any of its  affiliates  to another
business unit during a Performance  Period, such Participant shall be eligible
to receive  such number of shares of Common Stock as the Board  Committee  may
determine  based  upon  such  factors  as the  Board  Committee  in  its  sole
discretion may deem appropriate.
 
8     .     Restricted Stock Awards
 
8.1         Awards.   Awards  of  shares  of  Common  Stock  subject  to  such
restrictions  as to  vesting  and  otherwise  as  the  Board  Committee  shall
determine,  may be made, from time to time, to Participants as may be selected
by the Board Committee.  The Board Committee may in its sole discretion at the
time of the Award or at any time  thereafter  provide for the early vesting of
such Award  prior to the  expiration  of the  Restriction  Period.  Each Award
under  this  Section 8.1  shall  be  evidenced  by a  Restricted  Stock  Award
Agreement  between the  Participant  and the Company  which shall  specify the
vesting schedule, any rights of acceleration,  any forfeiture conditions,  and
such other terms and conditions as the Board Committee shall determine.
 
8.2         Stock Certificates.  Upon an Award of shares of Common Stock under
Section 8.1 of the Plan,  the Company shall issue a certificate  registered in
the name of the Participant  bearing the following legend and any other legend
required by any federal or state  securities laws or by the Delaware  Business
Trust Act.
 
 
 
            "The  sale or other  transfer  of the  shares of stock
            represented by this  certificate is subject to certain
            restrictions  set  forth in the  Federated  Investors,
            Inc.  Stock  Incentive  Plan,   administrative   rules
            adopted  pursuant to such Plan and a Restricted  Stock
            Award  Agreement  between  the  registered  owner  and
            Federated  Investors,  Inc.  A copy of the Plan,  such
            rules  and such  agreement  may be  obtained  form the
            Secretary of Federated Investors, Inc."
 
Unless otherwise  provided in the Restricted Stock Award Agreement between the
Participant and the Company,  such  certificates  shall be retained in custody
by the  Company  until the  expiration  of the  Restriction  Period.  Upon the
expiration of the Restriction  Period, the Company shall (i) cause the removal
of the legend from the  certificates for such shares as to which a Participant
is entitled in accordance with the Restricted  Stock Award  Agreement  between
the  Participant and the Company and  (ii) release  such shares to the custody
of the Participant.
 
8.3         Rights   as   Shareholders.   During   the   Restriction   Period,
Participants  shall be entitled to receive  dividends and other  distributions
paid with respect to all shares awarded thereto under Section 8.1 hereof.
 
8.4         Transferability of Shares.  Certificates  evidencing the shares of
Common Stock  awarded under the Plan shall not be sold,  exchanged,  assigned,
transferred,   pledged,  hypothecated  or  otherwise  disposed  of  until  the
expiration of the Restriction Period.
 
8.5         Termination  of  Employment.  If a  Participant  ceases  to  be an
employee  of either  the  Company or of any of its  affiliates,  the number of
shares  subject  of the  Award,  if any,  to which  the  Participant  shall be
entitled  shall be determined in accordance  with the  Restricted  Stock Award
Agreement between the Participant and the Company.  All remaining shares as to
which  restrictions  apply at the date of termination  of employment  shall be
forfeited  subject  to  such  exceptions,  if  any,  authorized  by the  Board
Committee.
 
9     .     Other Stock-Based Awards
 
      Awards of shares of Common  Stock and other  awards  that are  valued in
whole or in part by reference  to, or are  otherwise  based on,  Common Stock,
may be made,  from time to time, to salaried  employees of the Company and its
affiliates as may be selected by the Board Committee.  Such Awards may be made
alone or in addition to or in connection with any other Award  hereunder.  The
Board Committee may in its sole discretion  determine the terms and conditions
of any such Award.  Each such Award shall be evidenced by an agreement between
the  Participant  and the Company  which shall specify the number of shares of
Common Stock subject of the Award, any consideration  therefor, any vesting or
performance  requirements  and such other  terms and  conditions  as the Board
Committee shall determine.
 
10    .     Outside Directors' Options
 
10.1        Initial Grants. Effective on the dates set forth below, each
category of Outside Director of the Company described below shall be
automatically granted an Option to purchase 5,000 shares of Common Stock:
 
      (i)   for any  Outside  Director  serving on the Board at the  effective
            date of the Offering, the effective date of the Offering;
 
      (ii)  for  any  Outside  Director  elected  by the  shareholders  of the
            Company  subsequent  to the effective  time of the  Offering,  the
            date of such  Outside  Director's  initial  election to the Board;
            and
 
      (iii) for any Outside Director  appointed by the Board subsequent to the
            effective time of the Offering,  the date such Outside  Director's
            appointment to the Board becomes effective.
 
All such Options shall be  Non-Statutory  Stock Options.  The Option Price for
all Options granted  pursuant to this  Section 10  shall be the greater of (a)
$19.00 per share or (b) one hundred  percent  (100%) of the Fair Market  Value
per share of Common Stock on the date of grant.
 
10.2        Annual  Grants.  Effective  on the date of each Annual  Meeting of
the  shareholders of the Company that occurs after the Offering,  each Outside
Director who will be continuing as a director after such Annual  Meeting,  but
not  including  any  Outside  Director  who is first  elected  at such  Annual
Meeting,  shall automatically be granted an Option to purchase 1,500 shares of
Common  Stock.  All such Options shall be  Non-Statutory  Stock  Options.  The
Option price shall be one-hundred  percent (100%) of the Fair Market Value per
share of Common Stock on the date of the grant.
 
10.3        Exercise of Options.  Two thousand  (2,000) of the initial Options
granted  pursuant  to Section  10.1 shall vest in an Outside  Director  on the
first  anniversary of such grant and one thousand five hundred  (1,500) of the
initial Options shall vest on each subsequent  anniversary of such grant until
such Options are fully vested at the end of three years.  All Options  granted
pursuant to Section 10.2 shall vest  immediately.  All vested Options shall be
immediately  exercisable  and may be exercised  by the Outside  Director for a
period of ten (10) years from the date of grant;  provided,  however,  that in
the event of the death or  disability  of an  Outside  Director,  the  Options
shall be  exercisable  only within the twelve (12) months next  succeeding the
date of death or  disability  and only if and to the extent  that the  Outside
Director  was  entitled  to  exercise  the  Options at the date of the Outside
Director's death or disability,  as the case may be. If an Outside  Director's
service with the  Corporation  terminates due to retirement all vested Options
may be exercised  by the Outside  Director for a period of ten (10) years from
the date of  grant;  provided,  however,  that in the  event of the death of a
retired  Outside  Director,  the Options shall be exercisable  only within the
twelve  (12)  months  next  succeeding  the  date  of  death.  If  an  Outside
Director's  service  with the  Company  terminates  for any reason  other than
retirement,  death or disability,  the Options shall be exercisable for thirty
(30) days  after the date of such  termination  and only if and to the  extent
the Outside  director was entitled to exercise the Options at the date of such
termination.  In the case of death,  such Options shall be exercisable only by
the  executor  or  administrator  of the Outside  Director's  estate or by the
person or persons to whom the  Outside  Director's  rights  under the  Options
shall  pass  by the  Outside  Director's  will  or the  laws  of  descent  and
distribution.  Notwithstanding the foregoing,  in no event shall any Option be
exercisable more than ten (10) years after the date of grant.
 
 
10.4        Payment  of  Option  price.   An  Option  granted  to  an  Outside
Director shall be  exercisable  only upon payment to the Company of the Option
price.  Payment for the shares shall be in United States  dollars,  payable in
cash or by check.
 
10.5        Adjustments.  In case  there  shall be a  merger,  reorganization,
consolidation,  recapitalization,  stock dividend or other change in corporate
structure  such that the  shares of Common  Stock are  changed  into or become
exchangeable  for a larger or smaller number of shares,  thereafter the number
of shares subject to outstanding  Options granted to Outside Directors and the
number of shares  subject  to  Options  to be  granted  to  Outside  Directors
pursuant  to  the  provisions  of  this  Section 10   shall  be  increased  or
decreased,  as the  case may be,  in  direct  proportion  to the  increase  or
decrease  in the number of shares of Common  Stock by reason of such change in
corporate  structure,  provided  that the number of shares  shall  always be a
whole  number,  and the purchase  price per share of any  outstanding  Options
shall, in the case of an increase in the number of shares, be  proportionately
reduced,  and in the case of a  decrease  in the  number of  shares,  shall be
proportionately increased.
 
11    .     Amendment or Termination of Plan
 
      The Board may amend,  suspend or terminate  the Plan or any part thereof
from time to time,  provided that no change may be made which would impair the
rights of a Participant to whom shares of Common Stock have  theretofore  been
awarded without the consent of said Participant.
 
12    .     Miscellaneous
 
12.1        Rights of Employees.  Nothing in the Plan shall  interfere with or
limit in any way the right of the Company or any  affiliate to  terminate  any
Participant's  employment  at any time,  nor confer upon any  Participant  any
right to continued employment with the Company or any affiliate.
 
12.2        Tax   Withholding.   The  Company  shall  have  the  authority  to
withhold,  or to  require  a  Participant  to remit to the  Company,  prior to
issuance or delivery of any shares or cash hereunder,  an amount sufficient to
satisfy  federal,  state and a local tax withholding  requirements  associated
with any Award. In addition,  the Company may, in its sole discretion,  permit
a  Participant  to satisfy any tax  withholding  requirements,  in whole or in
part,  by  (i) delivering  to the Company  shares of Common Stock held by such
Participant  having  a Fair  Market  Value  equal  to the  amount  of the tax;
(ii) directing  the  Company  to  retain  shares  of  Common  stock  otherwise
issuable  to the  Participant  under  the  Plan;  or (iii)  any  other  method
approved by the Board Committee.
 
12.3        Status  of   Awards.   Awards   hereunder   shall  not  be  deemed
compensation  for purposes of computing  benefits under any retirement plan of
the Company or  affiliate  and shall not affect any  benefits  under any other
benefit  plan now or  hereafter  in effect  under  which the  availability  or
amount of benefits is related to the level of compensation.
 
12.4        Waiver of  Restrictions.  The  Board  Committee  may,  in its sole
discretion,   based  on  such  factors  as  the  Board   Committee   may  deem
appropriate,  waive in whole or in part, any remaining restrictions or vesting
requirements in connection with any Award hereunder.
 
12.5        Adjustment of Awards.  Subject to Section 11,  the Board Committee
shall be authorized to make  adjustments in  performance  award criteria or in
the terms and conditions of other Awards (except Options  granted  pursuant to
Section 10 hereof) in recognition of unusual or nonrecurring  events affecting
the  Company  or its  financial  statements  or changes  in  applicable  laws,
regulations  or  accounting   principles;   provided  however,  that  no  such
adjustment  shall  impair the rights of any  Participant  without his consent.
The Board  Committee may also make Awards  hereunder in replacement  of, or as
alternatives to, Awards previously granted to Participants,  including without
limitation,  previously granted Options having higher Option Prices and grants
or rights under any other plan of the Company or of any acquired  entity.  The
Board  Committee may correct any defect,  supply any omission or reconcile any
inconsistency  in the Plan or any  Award in the  manner  and to the  extent it
shall deem  desirable to carry it into effect.  In the event the Company shall
assume outstanding  employee benefit awards or the right or obligation to make
future such awards in connection with the  acquisition of another  corporation
or business  entity,  the Board  Committee may, in its  discretion,  make such
adjustments  in  the  terms  of  Awards  under  the  Plan  as  it  shall  deem
appropriate.  Notwithstanding  the  above,  only the full  Board  (and not the
Board  Committee) shall have the right to make any adjustments in the terms or
conditions of Options granted pursuant to Section 10.
 
12.6        Consideration  for  Awards.  Except as  otherwise  required in any
applicable agreement or by the terms of the Plan,  Participants under the Plan
shall not be  required  to make any  payment or provide  consideration  for an
Award other than the rendering of services.
 
12.7        Special  Forfeiture Rule.  Notwithstanding  any other provision of
this Plan to the contrary,  the Board  Committee shall be authorized to impose
additional  forfeiture  restrictions  with respect to Awards granted under the
Plan,  other than Awards  pursuant to Section 10  hereof,  including,  without
limitation,  provisions  for  forfeiture  in the event the  Participant  shall
engage in competition with the Company or in any other  circumstance the Board
Committee may determine.
 
12.8        Effective  Date and Term of Plan.  The Plan shall be  effective as
of the date it is approved by the Board,  subject to the  approval  thereof by
the  shareholders of the Company.  Unless  terminated  under the provisions of
Section 11 hereof, the Plan shall continue in effect  indefinitely;  provided,
however,  that no Incentive  Stock  Options  shall be granted  after the tenth
anniversary of the effective date of the Plan.
 
      12.9  Compliance  with Section 162(m).  It is the Company's  intent that
compensation  payable  pursuant to Awards  (other  than  Awards of  Restricted
Stock which vest based solely on continued  employment) to "covered employees"
as  such  term is  defined  in  Regulation  1.162-27(c)(2)  promulgated  under
Section  162(m) of the Code, or any successor  provision  ("Section  162(m)"),
qualify  as   "performance-based   compensation"   as  defined  in  Regulation
1.162-27(e)  under Section  162(m).  If any provision of this Plan or an Award
is  later  found  to  make  compensation   intended  to  be  performance-based
compensation  ineligible  for such  treatment,  the provision  shall be deemed
null and  void,  unless  otherwise  determined  by a  committee  of the  Board
comprised  solely  of  "outside  directors"  as  such  term is  defined  under
Regulation 1.162-27(e)(3) under Section 162(m).
 
 
 
 
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